When the Fed decreases the money supply, what will happen to nominal interest rates?
What will be an ideal response?
They will rise.
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Use the figure below to answer the next question. 
Economic growth is best represented by a
A. move from X on AB to Y on CD. B. move from X to Z along AB. C. move from Z to X along AB. D. shift of the production possibilities frontier from CD to AB.
If there is no Ricardo-Barro effect, a government budget surplus ________ the total supply of loanable funds and ________ the real interest rate
A) does not change; does not change B) increases; raises C) increases; lowers D) decreases; lowers E) decreases; raises
In the Harrod-Domar model, if the savings rate is 20% and the incremental capital output ratio is five, abstracting from depreciation, what is the implied growth rate?
What will be an ideal response?
Uncertainty about interest-rate movements and returns is called
A) market potential. B) interest-rate irregularities. C) interest-rate risk. D) financial creativity.